At the stage of granting registration under section 12AA, stage of granting registration CIT(E) was not required to examine application of income

Income Tax Act, 1961, Section 12AA

Charitable trust–Registration under section 12AA—Denial on the ground of non-application of income for charitable purposes

Conclusion: Where objects of the trust having applied for registration under section 12AA were charitable in nature and its activities were found genuine, no registration could be denied under section 12AA merely on the ground that income generated had not been applied by the trust for its objectives.

Assessee-trust applied for registration under section 12AA. CIT(E) rejected assessee|s application on the ground that activity of assessee could not be termed as charitable as it had been systematic generating surplus from year-to-year and amount had not been applied for its objectives.

Held: Merely because assessee was generating surplus could not be the basis for inferring that assessee was not carrying out activities for charitable purposes. Further assessee was an institution created by the Government of Madhya Pradesh and it could not, by any stretch of imagination, be inferred that assessee was created for the purpose of making profit. Also, at the stage of granting registration under section 12AA, stage of granting registration CIT(E) was not required to examine application of income. All that he might examine was whether application was made in accordance with the requirements of section 12A read with rule 17A and whether Form No. 10A has been properly filled up. He had also to examine whether objects of the trust were charitable or not. The stage of application of income is when such trust or institution files return. As objects of the assessee were duly charitable in nature and there was no dispute as to genuineness of its activities, no registration could be denied under section 12AA.

Decision: In assessee’s favour.

Referred: CIT v. D. P. R. Charitable Trust (2011) 61 DTR 410 (MP) : 2012 TaxPub(DT) 3313 (MP-HC), CIT v. Red Rose School (2007) 212 CTR (All) 394 : 2007 TaxPub(DT) 0989 (All-HC), CIT v. Surya Educational and Charitable Trust (2013) 355 ITR 280 (P&H) : 2012 TaxPub(DT) 0780 (P&H-HC),Divine Shiksha Samiti v. CIT (Exemptions) (2018) 68 ITR (Trib) 310 (Indore) : 2018 TaxPub(DT) 6751 (Ind-Trib),Fifth Generation Education Society v. CIT (1990) 185 ITR 634 (All) : 1990 TaxPub(DT) 1173 (All-HC), New Life in Christ Evangelistic Association v. CIT (2000) 246 ITR 532 (Mad) : 2001 TaxPub(DT) 0092 (Mad-HC), Shantagauri Ramniklal Trust v. CIT (1999) 239 ITR 528 (Guj) : 1999 TaxPub(DT) 0963 (Guj-HC) and Sree Anjaneya Medical Trust v. CIT (2016) 382 ITR 399 (Ker) : 2016 TaxPub(DT) 1435 (Ker-HC).

 

IN THE ITAT, INDORE BENCH

KUL BHARAT, J.M. & MANISH BORAD, A.M.

Rajiv Gandhi Proudyogiki Vishwavidyalaya v. CIT (E)

I.T.A. No. 614/Indore/2018

8 February, 2019

Assessee by: Sutnit Netna and Ayush Gupta, Authorised Representatives

Depart­ment by: Ashima Gupta, Departmental Representative

Kul Bharat, J.M.

This appeal by the assessee is directed against the order of the Commissioner (Exemption), Bhopal dated 27-4-2018. The assessee has raised the following grounds of appeal :–

“1. That the Order, dt. 27-4-2018 passed by the learned Commissioner declining registration under section 12AA to the appellant is vitiated in law and on facts.

2. That the order of the learned Commissioner is perverse on account of consideration of facts which are not relevant for deciding an application under section 12AA and also vitiated on account of non-consideration of vital information given by the appel­lant.

3. That on the facts and in the circumstances of the case and in law, the Commissioner (Exemption) has grossly erred in denying regis­tration to the assessee-society under section 12AA of the Income Tax Act, 1961 (“the Act”) as claimed. As the stage of grant of registration under section 12A, the learned Commissioner is supposed to examine only the objects of the society/trust and it is not appropriate on the part of the Commissioner to examine the aspect of application of income at the stage of granting registration under section 12AA, which is to be examined by the assessing officer on a year to year basis at the time of claiming exemptions under section 11 of the Income Tax Act.

4. That section 2(15) defines the term ‘charitable purpose’ in an inclusive manner and includes within its ambit relief of poor, education, medical relief and advancement of any other object of gen­eral public utility. Education per se is a charitable purpose just like relief of poor or medical relief and the appellant university also does not exist for profit as there is no clause for distribution of profits or net assets in case of dissolution to members as it is fully Government owned. Thus the emphasis of the learned Commissioner on profits and FDR’s was misplaced both on facts and in law in so far as deciding the application under section 12AA was concerned.

5. That the learned Commissioner has picked up objects at SI. Nos. (c), (d) and (e) from the objects clause to arrive at the conclusion that the objects are not charitable. These objects (c), (d) and (e) are merely incidental objects and are well connected with the main object of providing technical education. The concentration of the learned Commissioner on incidental objects is contrary to the ratio in Sural Art Silk’s wherein the Supreme Court has held that if the primary or dominant purpose of a trust is charitable another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent it from being valid charity.

6. That the test which has to be applied is whether the object which is said to be non-charitable is the main or primary object of the trust or institution or its is ancillary or incidental to the dominant or primary object which is charitable and in the case of the appellant university the main object is clearly education which is charitable object as per section 2(15) of the Income Tax Act, 1961.”

2. The facts giving rise to the present appeal are that an application for registration under section 12AA of the Income Tax Act, 1961 (hereinafter called as “the Act”) in form No. 10A was submitted on 3-10-2017 to the Office of the learned Commissioner (Exemption). The said application was rejected by the learned Commissioner after giving opportunity to the assessee of hearing and considering the submission of the assessee. The learned Commissioner rejected the application on the basis that activity of the assessee cannot be termed as charitable as it has been systematic generating surplus from year to year and the amount has not been applied for its objectives. Further, the accounts are not audited and higher interest income has been earned from the surplus so generated, etc.

3. The effective ground of appeal is against the rejection of application by the learned Commissioner (Exemption). The learned counsel for the assessee submitted that the reasoning for rejection of the applica­tion is contrary to the settled law. He submitted that the order is ex facie perverse and contrary to the records. The learned counsel for the assessee vehemently argued that at the stage of registration under section 12AA of the Act, the application of fund by the assessee or generation of the fund by the assessee should not be the ground for allowing or rejecting of the application. The learned counsel for the assessee submitted that the learned Commissioner (Exemption) has not given any find­ing on the objectives of the assessee. He submitted that merely because the assessee is generating surplus should not be a ground for rejection of appli­cation and it cannot be the basis for inferring that the assessee is not carrying out activities for charitable purposes. The learned senior counsel in support of the arguments relied upon various judgments, more particularly, the judgment of the Hon’ble Madhya Pradesh High Court rendered in the case of CIT v. D. P. R. Charitable Trust (2011) 61 DTR 410 (MP) : 2012 TaxPub(DT) 3313 (MP-HC). He submitted that the assessee is a Government organization. It cannot be by any stretch of imagination inferred that the assessee is created for the purpose of making profit. The learned counsel for the assessee also placed reliance on the judgment of the Hon’ble Allahabad High Court rendered in the case of Fifth Generation Education Society v. CIT (1990) 185 ITR 634 (All) : 1990 TaxPub(DT) 1173 (All-HC).

4. Per contra, the learned Commissioner (Departmental Representative) vehemently opposed the submissions and supported the order of the learned Commissioner (Exemption). The learned Departmental Representative submitted that from the facts avail­able on records, it cannot be inferred that the assessee is carrying out any charitable activities, where it has accumulated huge surplus funds, which have not been utilized for any educational or charitable purposes.

5. In rejoinder, the learned counsel for the assessee submitted that the submission of the learned Commissioner (Departmental Representative) that no educational activity was carried out is patently wrong. He submitted that a detailed note of activity conducted by the assessee university in the last three years as well as the purpose of fund accumulated was given to the Commissioner (Exemption) which has been conveniently ignored to be mentioned in the order. The learned counsel drew our attention to the statement of facts, wherein the contents of the notes placed before the learned Commissioner is reproduced. Further, he submitted that the objection of the learned Commissioner (Exemption) that books are not audited is also patently false and perverse. He submitted that all the books are regularly maintained and show complete details of income and expenditure and balance at the end of the year. The accounts of a society are not required to adhere to section 145A of the Act are for business or profes­sional income and are not applicable to societies and trusts, in fact the books have been scrutinized by the Comptroller and Auditor General audit team and no discrepancies have been pointed out.

6. We have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. The learned Commissioner (Exemption) has rejected the application on the following grounds :–

“7. In the light of above findings, it can be briefly summarized as under :–

(i) There is consistent and systematic generation of surplus/profits from year to year.

(ii) The assessee has accumulated funds of almost rupees one thousand rupees from profits generated over the years.

(iii) The profits earned from year to year are not being ploughed back for charitable purposes.

(iv) The profits earned are invested in ever increasing FDRs to earn interest income instead of utilizing for charitable purposes.

(v) The books of account are not being regularly/properly main­tained and mixed system of accounting is followed by the assessee as per its sweet wish.

(vi) The books of account are not regularly audited by any auditor ; in fact it was last audited for the financial year 2009-10.

(vii) There are several discrepancies pointed out by the auditors in working of the university.

(viii) The auditors pointed out that the excess or unreasonable payment was made to specified person under section 13(3) of the Act.

(ix) There are several non charitable objects in the object clause,

(x) The major activities do not come under purview of the term ‘education’ as used in section 2(15) of the Act. In fact, the major receipts are from such activities wherein huge profits have been generated consistently which show the commercial nature of activi­ties.

(xi) There is negligible investment in fixed assets as compared to investments in FDRs or ploughing back into education or other charitable activity.

(xii) The major application of surplus so far has been to invest in FDRs and earn interest thereupon and such benefits are not being passed on to the students by reducing the fees that the applicant is collecting from students and educational institutions.”

7. The moot question for our consideration is that whether the application was rightly rejected seeking registration under section 12AA of the Act on the basis of the reasons stated herein above. For the sake of clarity, the relevant provision of law is reproduced herein below :–

“Section 12A :–

(1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:–

(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1-7-1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, (whichever is later and such trust or institution is registered under section 12AA):-

(Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,–

(i) from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons ;

(ii) from the 1st day of the financial year in which the applica­tion is made, if the Commissioner is not so satisfied :–

(Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1-6-2007 ;

(aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1-6-2007 in the prescribed form and manner to the Commissioner and such trust or institution is registered under section 12AA;”

Following clause (authorities below) shall be inserted after clause (aa) of sub-section (1) of section 12A by the Finance Act, 2017 with effect from 1-4-2018 :–

“(ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A (as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)) and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA;

(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or insti­tution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. . . .

(2) Where an application has been made on or after the 1-6-2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made.

Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the assessing officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year :–

Provided further that no action under section 147 shall be taken by the assessing officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year :–

Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.”

Section 12AA :–

(1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1)) of section 12A, shall–

(a) call for such documents or information from the trust or insti­tution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and

(b) after satisfying himself about the objects of the trust or insti­tution and the genuineness of its activities, he–

(i) shall pass an order in writing registering the trust or insti­tution ;

(ii) shall, if he is not so satisfied, pass an order in writing refus­ing to register the trust or institution, and a copy of such order shall be sent to the applicant :-

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

(1A) All applications, pending before the Principal Chief Commis­sioner or Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1-6-1999 shall stand transferred on that day to the Principal Commissioner or) Commissioner and the Principal Commissioner or Commissioner may proceed with such applications under that sub-section from the, stage at which they were on that day.

(2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A.

(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A (as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Principal Commissioner or Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution :–

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable oppor­tunity of being heard.

(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution :–

Provided that the registration shall not be cancelled under this sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.”

8. As per the aforementioned provision, the Commissioner (Exemption) has to satisfy himself about the objects of the trust or insti­tution and the genuineness of its activities. For testing this, the learned Commissioner (Exemption) is empowered to call for such documents or information as he thinks necessary and may also make such inquiries as he may deem necessary in this behalf. In the back drop of these provisions, it has to be examined as to whether the objects of the assessee are not charitable and also the activities undertaken are genuine or not. Undisputedly, the assessee is an institution created by the Government of Madhya Pradesh. The learned counsel for the assessee has placed reliance on the judgment of the Hon’ble Madhya Pradesh High Court in the case of CIT v. D. P. R. Charitable Trust (2011) 61 DTR 410 (MP) : 2012 TaxPub(DT) 3313 (MP-HC), wherein the Hon’ble High Court has held as under :–

“7. We have considered the submissions made on both sides. Before proceeding to deal with the controversy we deem it appro­priate to notice relevant provisions, namely, sections 2(15), 12A and 12AA of the Act. Sections 2(15) and 12A, as they stood at the relevant time, read as under :–

‘2 Definitions.

2.(15) “charitable purpose” includes relief of the poor, educa­tion, medical relief and the advancement of any other object of general public utility.

12A. Conditions as to registration of trusts, etc.–The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :–

(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1-7-1973 or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the insti­tution whichever is later and such trust or institution is registered under section 12AA :–

Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of section 11 and section 12 shall apply in relation to the income of such trust or institution,–

(i) From the date of creation of the trust or the establishment of the institution. If the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons ; . . .

(b) Where the total income of the trust or institution as computed under this Act without giving effect to the provisions of sections 11 and section 12 exceeds fifty thousand rupees in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of the such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.’

Section 12AA which was inserted by the Finance Act, 1996 with effect from 1-4-1997 reads as under :–

’12AA. Procedure for registration.–(1) The Commissioner on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1) of section 12A, shall–

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquires as he may deem necessary in this behalf ; and

(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities he–

(i) shall pass an order in writing registering the trust or insti­tution ;

(ii) shall if he is not satisfied pass an order in writing refusing to register the trust or institution,

and a copy of such order shall be sent to the applicant :–

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

(1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1-6-1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.

(2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of sub-section (1) of section 12A.

(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution :–

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable oppor­tunity of being heard.’

8. Section 12A of the Act prescribes conditions for registration of the trust whereas section 12AA of the Act prescribes the procedure for registration. A careful reading of the relevant provisions would reveal that application for registration under section 12A has to be made in form No. 10A prescribed by rule 17A before the expiry of one year from the date of creation of the trust or establishment of the institution whichever is later. The application has to be made by a person in receipt of income of the trust. Thus while dealing with the application for registration the Commissioner has to examine whether the application is made in accordance with section 12A read with rule 17A and whether Form No. 10A has been properly filled up. He may also examine whether objects of the trust are charitable or not. Section 12AA nowhere provides that Commissioner while considering the application for registration is also required to examine whether the income derived by the trust is being spent for charitable purposes or the trust is earning profit. The language employed by the legislature in section 12AA only requires that activities of the trust or institution must be genuine which should be in consonance with the object of the trust. At this stage, the Commissioner is not required to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A and whether form No. 10A has been prop­erly filled up. He has also to see whether the objects of the trust are charitable or not. Our view finds support from the Division Bench decision of the Allahabad High Court rendered in the case of CIT v. Red Rose School (2007) 212 CTR (All) 394 : 2007 TaxPub(DT) 0989 (All-HC) and the decisions in the cases of New Life in Christ Evangelistic Association v. CIT (2000) 246 ITR 532 (Mad) : 2001 TaxPub(DT) 0092 (Mad-HC), Fifth Generation Education Society v. CIT (1990) 185 ITR 634 (All) : 1990 TaxPub(DT) 1173 (All-HC) and Shantagauri Ramniklal Trust v. CIT (1999) 239 ITR 528 (Guj) : 1999 TaxPub(DT) 0963 (Guj-HC).”

9. The learned counsel for the assessee has also placed reliance on the judgment of the Kerala High Court in the case of Sree Anjaneya Medical Trust v. CIT (2016) 382 ITR 399 (Ker) : 2016 TaxPub(DT) 1435 (Ker-HC), wherein the Hon’ble High Court has held as under (page 408) :–

“It is clear from a plain reading of sections 12A and 12AA of the Act that what is intended thereby is only a registration simpliciter of the entity of a trust. This has been made a condition precedent for the claiming of benefits under the other provisions of the Act regarding exemption of income, contribution, etc. No examination of the modus of the application of the funds of the trust or an examination of the ethical background of its settlers is called for while considering an application for registration. The stage for consideration of the rele­vance of the object of the Trust and the application of its funds arises at the time of the assessment. Where benefits are claimed by asses-sees in terms of sections 11 and 12 of the Act, the question as to the nature of such contribution and income can be looked into. At the time of registration of the trust, going by the binding judgments of the Apex Court, what is to be looked into is whether the Trust is e genuine one and whether it is a sham institution floated only to avail the benefits of exemption under the Act. There is no such finding in the impugned order.”

The reliance is also placed on the Hon’ble Allahabad High Court 10 rendered in the case of Fifth Generation Education Society v. CIT (1990) 185 ITR 634 (All) : 1990 TaxPub(DT) 1173 (All-HC) wherein the Hon’ble High Court has held as under (page 635):–

“It is evident that at this stage, the Commissioner is not to examine the application of income. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are char­itable or not. At this stage, it is not proper to examine the application of income.”

11. Further reliance is placed on the judgment of the Hon’ble High Court of Punjab and Haryana, wherein the Hon’ble High Court followed the judg­ment of the other branch of the same High Court rendered in the case of CIT v. Surya Educational and Charitable Trust (2013) 355 ITR 280 (P&H) : 2012 TaxPub(DT) 0780 (P&H-HC), wherein the Hon’ble High Court held that the object of section 12AA of the Act, is to examine the genuineness of the objects of the trust but not the income of the trust for charitable or religious purposes. The stage of appli­cation of income is when such trust or institution files its return. The learned counsel has also placed reliance on the decision of the co-ordinate Bench rendered in the case of Divine Shiksha Samiti v. CIT in I.T.A. No. 1034/Ind/2016–(2018) 68 ITR (Trib) 310 (Indore) : 2018 TaxPub(DT) 6751 (Ind-Trib), where the coordinate bench of this Tribunal following the decision of the other co-ordinate Bench directed the learned Commissioner to grant registra­tion under section 12AA of the Act. From the reading of the case laws as relied by the learned counsel for the assessee, it emerges that at the age of granting registration, the learned Commissioner has to restrict himself to the objects of the assessee and genuineness of the activ­ities. At the stage of granting registration, the Commissioner has not to examine whether the funds have been applied or not. In the case in hand, the learned Commissioner rejected the application substantially on the basis that the assessee has accumulated funds which are not been ploughed back for charitable purposes. The profits earned are invested in ever increasing FDRs to earn interest income instead of utilising for charitable purposes. The explanation of the assessee for accumulating the funds is that it planned for future expansion of technical education in state. The assessee has also applied funds for constructing the hotels for boys and girls, auditorium with the sitting capacity of 3000, campus devel­opment to establish green campus. The assessee has also established UITs at Jhabua and Shadol for which the capital expenditure will be approxi­mately Rs. 100 crores. In our considered view, the learned Commissioner has not considered the explanation in the light of the binding precedents. We therefore, set aside the order of the learned Commissioner (Exemption) and restore the issue of granting of registration to his file to consider the same after considering the facts as stated in the note on activity and the ratio laid down in the binding precedent as relied by the learned counsel for the assessee. Grounds raised in this appeal are allowed for statistical purposes.

12. In the result, the appeal filed by the assessee is allowed for statistical purposes.